An elegant, detailed and accurate news site for those interested in the maritime business in the Southeastern United States, Caribbean and Central America

Puerto Rico lost electricity again on April 18th, seven months after Hurricane Maria first knocked out the island's power grid. For people in some remote rural areas, the blackout was more of the same. Their power had yet to be restored.

The dangerous fragility of Puerto Rico's energy systems has put other Caribbeancountries on high alert. Across the region, electric grids are dated, ailing, and overburdened—making it easy work for a powerful passing storm.

Now that task seems far more urgent. To move beyond fossil fuels, Caribbean countries must transform their energy systems by building in new, greener sources of power. That will also make electric grids more resilient to weather extremes because they will be decentralized—pulling from a diverse array of power sources.

CLIMATE CHANGE IN THE CARIBBEAN

Unfortunately, I believe that climate change will also complicate the region's transition toward renewable energy. The Caribbean is comprised of island nations, which are the world's most vulnerable places when it comes to rising seas, changing weather patterns, and other effects of global warming.

The Caribbean is already seeing more weather extremes. Research suggests, for example, that northern Caribbean countries like Cuba, Jamaica, and the Bahamas have gotten rainier over the past three decades, though historical data is limited.

WHY TRADITIONAL ENERGY SOURCES NEED TO ADAPT

Installing more wind, solar, and hydropower—the world's most reliable and common renewable energy options—would seem to be a more obvious step in the right direction. Between 2015 and 2016, the global capacity of these green power sources rose 9 percent —nearly half of which comes from the widespread adoption of solar panels.

Changing precipitation and temperature patterns in the Caribbean also affect hydro and solar power. More rain in the region's north means fewer sunny days than anticipated. Higher temperatures in other countries suggests increased likelihood of drought, leading rivers to run dry.

Climate change is a profoundly unpredictable process, though. That makes it harder for weather models to correctly identify which renewable energy infrastructure should be built where.

THE FUTURE IS NOW

The Caribbean is making progress in planning for a future of more renewable energy, though.

Jamaica aims to install new automated weather stations that will collect real-time weather data nationwide. This initiative will help meteorologists across the entire Caribbean better predict future weather, which in turn supports the development of renewable energy systems.

So will a new climate model developed by my colleagues at the University of the West Indies. The system, called SMASH, can aid planners in siting wind farms and predicting the path and severity of the hurricanes that could mangle turbines.

A new Caribbean drought atlas from Cornell University has compiled climate data going back to 1950. The tool won't just help sustain food production during dry times; I believe it will also provide engineers precipitation data that's critical to planning hydropower enterprises.

Wind farms, too, are adapting to the instability of this changing climate. Once firmly pegged to the ground, turbines can now float thousands of feet above the land, spooled out like kites to capture winds where they blow hardest. Floating turbines will also fare better during hurricanes.

All of these technologies may eventually help Caribbean countries navigate their way through climate change toward a real renewable energy boom. But the climate change conundrum won't be solved before the 2018 hurricane season hits.

This article was originally published onThe Conversation. Read theoriginal article. Masaō Ashtine is a lecturer in alternative energy at the University of the West Indies—Mona Campus.

April 10, 2018

Today in front of the combined Senate committees Mark Zuckerberg made a key distinction. It is assumed that Facebook accumulates data on its users that it then sells to advertisers. But this is not the case at all. Facebook accumulates data on its users that the users allow Facebook to collect. On the other hand advertisers come to Facebook and describe in detail the kind of people they want to reach with their advertisements.

Facebook then compares the advertisers' request to the data that Facebook has collected. Facebook then selects the individuals who will see the advertisers who are appropriate and it connects the Facebook users with the advertiser. Actually an algorithm does it. It does not inform the advertiser about any of the actual data used to match it with the Facebook user under any circumstances.

Advertiser A wants to advertise snow shoes to individuals who need snow shoes, perhaps, and those who can afford snow shoes. Facebook scours its users for information about the amount of snow they endure. It looks for anything that might be said about snow and snow shoes by its members. Facebook decides which of those who had issues with snow --- probably everybody who has issues with snow --- and Facebook then allows the snow shoe advertiser to access each and every person who has issues with snow who is on Facebook and who -- and this important, who has not specifically said they don't want advertisements for snow shoes or any other shoes.

You talk about cars and they connect the car ads to you. You talk about sports cars and the connect the sports car companies (who have paid to be connected) with you. You talk about Chevys and you get some Chevy ads. And for your convenience you get the Chevy ads from Chevy companies that are close to your location, which the local Chevy companies pay for. But the ads are always a pass through from Facebook to you based on your data and not from the Chevy dealer. He may be wasting his money advertising to you. But he will never know it.

March 19, 2018

Russian government cyber actors are engaging in a sophisticated cyber attack campaign targeting organization in critical infrastructure sectors. This attack is occurring in two stages. Initially, threat actors are attacking the networks of smaller organizations with preexisting relationships with larger organizations that are the ultimate targets of the attacks. Malware and spear phishing are the most common tactics during these initial "staging" attacks. The threat actors then use their access to staging targets’ networks to target their intended, larger victims. Organizations in the maritime industry are encouraged to learn more about this attack and ensure that they are following cyber risk management best practices to limit their vulnerability to this attack.

Background

Per Department of Homeland Security (DHS) and the Federal Bureau of Investigation (FBI) reports, Russian government actors are targeting organizations in the energy, nuclear, water, aviation, critical manufacturing, and other commercial sectors. DHS and FBI warn of a sophisticated, multi-layered intrusion campaign focused on gaining remote access to small commercial-focused networks via malware or spear phishing campaigns. Once compromised, these networks enable Russian government cyber actors to gain remote access into targeted sector networks, facilitating network reconnaissance and the collection of information pertaining to Industrial Control Systems (ICS). This includes shipping and marine terminal facilities.

Russian government cyber actors are using a range of tactics, techniques, and procedures to further this campaign, including:

Spear-phishing emails (from compromised legitimate account),

Watering-hole domains,

Credential gathering,

Open-source and network reconnaissance,

Host-based exploitation, and

Targeting ICS infrastructure.

The threat actors appear to have deliberately chosen the organizations they targeted, rather than pursuing them as targets of opportunity. Staging targets held preexisting relationships with many of the intended targets.

What Should a Maritime Company Do?

Although most maritime companies will not be intended targets of these attacks, maritime companies have preexisting relationships with a wide variety of governmental and commercial actors that support wide-ranging US interests, and accordingly should be aware of their potential status as a staging target for this attack. More specifically, maritime transportation companies can be exploited to access and attack US commercial entities.

As part of this announcement, the US-CERT released indicators of compromise (IOCs) related to this campaign, available at: https://www.us-cert.gov/ncas/alerts/TA18-074A . DHS and FBI recommended that network administrators review the IP addresses, domain names, file hashes, network signatures, and YARA rules provided at the above link, and add the IPs to their watchlists to determine whether malicious activity has been observed within their organization. They also advised system owners to run the YARA tool on any system suspected to have been targeted by these threat actors.

HudsonCyber recommends that all clients immediately:

Review the detection and prevention guidelines and other best practices detailed at the link above.

Implement a robust data backup process that safeguards any data considered valuable to their organization or critical to their business operations; data backups must be stored offline (disconnected from the network) and tested regularly to confirm their integrity. Perform regular testing to confirm data integrity.

Advise shore-based employees and crews of the increase in cyber threats and provide awareness training on social engineering tactics, safe Internet browsing behaviors, and how to respond to suspected cyber incidents.

Source: US Department of Homeland Security

For more information about how HudsonCyber can support your cyber risk management needs, contact us today:

July 10, 2017

What is the future of container shipping? Will industry consolidation continue and, if so, who will still exist in 2020? All highly relevant questions constituting a fairly amusing – yet nerdy – game at supply chain conferences. This often comes with the predictable disclaimer: nobody really knows. However, there are three “facts” that make predicting the future of the container shipping industry relatively easy. One wild card remains.

1. More consolidation is “needed”Almost all businesses in the logistics chain are currently suffering from the effects of consolidation in container shipping: shippers deplore the decline of service frequency, ports the loss of calls and terminals the stress of larger peaks. Yet, within the current business model, consolidation might be needed for the container shipping industry to be profitable: they need size to finance and fill bigger ships. In the coming years an impressive amount of new mega-ships will come into operation. Along with the predictable awe, this will bring even more overcapacity to a sector that has so far only been able to survive this by laying up vessels and scrapping ships that would normally be considering too young to demolish. So predicting more mergers is a pretty safe bet. Since 2014 we have witnessed frantic merger activity resulting in rapid disappearance of smaller carriers. There are still a few left that look vulnerable and might have only one choice: be eaten or to continue as regional niche player. By 2020 there will be no more than six global carriers with comprehensive networks.

2. COSCO will not stop until it is the biggestIt has been a spectacular runner-up: ranked sixth largest just two years ago, it is now the fourth largest global container carrier – and would enter the top 3 if the merger with OOCL goes ahead. Its ascendance will likely not stop there. As a state-owned company, COSCO has a logic that is not only commercial, but also geopolitical, maybe even predominantly so. China wants to secure its supply chains and strengthen its naval presence: dominating in container shipping can help achieve this. This has underpinned the merger of COSCO and China Shipping, their recent attempts to acquire other medium-sized carriers and the Chinese terminal shopping spree all over the world.

3. For the EU, “champions” trump competitionWhich means: consolidation is fine especially as it has benefited European carriers. This has not been admitted as such, but can be deducted from its behaviour with respect to the proposed P3-alliance and the recent merger of Maersk and Hamburg Sud. P3 would have forged an alliance of the three largest global container carriers: Maersk, MSC and CMA CGM- all European – in a way that would have transformed the classical vessel sharing agreement into a more strategic form of cooperation. The European Commission signalled it would accept this, but the Chinese authorities did not give regulatory approval, officially because it would distort competition and quite likely also for geopolitical reasons: namely to avoid the emergence of a European champion. More recently, the European Commission also accepted the merger of market leader Maersk and Hamburg Sud, under certain conditions. These precedents will limit the possibilities of the Commission to stop mergers that it likes much less, e.g. COSCO taking over a European carrier. This means – paradoxically – that the EU will have difficulties to effectively play the card of competition policy against China: it will have to allow the same degree of concentration for Chinese carriers that it apparently finds reasonable for European carriers.

How will the game unfold?The few smaller global carriers that remain are from Hong Kong (OOCL) and Taiwan (Evergreen and Yang Ming). COSCO has the best cards to buy all three. Maybe the most important reason is geopolitical. The Chinese will simply not accept that a European competitor would dare to buy up a shipping firm from their “backyard”. So this is very unlikely to happen. Moreover, COSCO is already cooperating with OOCL and Evergreen in the Ocean Alliance.

The crucial question seems to me what is going to happen to CMA CGM. It entered the Ocean Alliance as the dominant player, but might become junior partner if COSCO manages to take over OOCL and Evergreen. Moreover, COSCO apparently has shown interest in buying shares of CMA CGM. Provided that the acquisitions of OOCL and Evergreen work out, buying only part of CMA CGM (say 24%) would help pushing COSCO beyond the reach of Maersk and make it world’s largest carrier. Additional advantage for the Chinese state: via the minority position in CMA CGM they would acquire a de facto majority in Terminal Link, the terminal operator owned for 51% by CMA CGM and for 49% by China Merchants Holding, another Chinese state-owned company. And who can exclude the possibility that COSCO Ports and China Merchants port terminals will merge one day?

Wild cardOver the coming months the Chinese will no doubt test the resolve of the French to block sales of CMA CGM shares to China. The French state might even consider to buy shares in CMA CGM to pre-empt the Chinese from doing so, which might be a logical consequence of the French discussion this year on what constitutes a strategic merchant fleet. However, one could wonder if this is a sustainable long-term solution. Given the recent re-emergence of the French-German axis and the growing assertiveness in Europe vis-à-vis China, another solution might make political sense. A joint French-German carrier, partly state-owned, with potential network complementarities would not only be a powerful expression of that new political reality, but also suddenly become world’s largest carrier. For this to happen, the French president would – for a start – need to go to Hamburg…

March 07, 2017

Better together: There is a logic behind terminals looking to work together in order to cope with bigger volumes
It's high time that terminals followed lines and ports and get in on the partnerships act finds
Felicity Landon
The US Federal Maritime Commission's decision allowing two Miami terminal operators 'to seek cooperation and commonality in both business and operating matters' certainly caused a stir. Does it pave the way for other terminals to seek close partnerships? Is it the turn of terminal operators to set up alliances that match up to the oversize alliances of their customers? And are they really free to go ahead?
The FMC gave its blessing for the Miami Marine Terminal Conference Agreement to take effect, allowing the South Florida Container Terminal Port of Miami Terminal Operating Company (POMTOC) to establish 'a variety of common rates, rules and practices, as well as to meet to discuss these matters'. It also went as far as suggesting that this agreement could form a template for terminal alliances to create framework service agreements with shipping line alliances.
Miami is the first high-profile example and every case will be different, says Neil Davidson, Drewry's senior analyst - ports & terminals. However, he adds: “The FMC are normally pretty cautious in terms of allowing parties to work together, and don't give their permission lightly. The fact that they also made a very general statement that they expect to see more terminals doing this is quite an interesting comment from the regulatory side. Having said that, the EU has its own set of rules and ways of weighing this up, of course.”
Reducing fragmentation of capacity is necessary in order to handle volumes that are so much bigger than they were, says Mr Davidson. There is a logic behind terminals looking to work together in order to cope with what is being thrown at them by their customers, he says - and there is scope for alliances to happen, but there are operational and regulatory challenges, and risks attached to such a partnership.
“Because of the peaks and pressures created by the bigger ships in port, the natural reaction might be to say I should work with my next-door-neighbour terminal rather than against him, to join forces for practical reasons and commercial reasons - the client has got bigger and more powerful, therefore I need to do the same.
“There are lots of sensible operational reasons for doing that, which would also benefit the shipping lines. But the dilemma is that the regulatory authorities would always be in the background - perhaps saying you are colluding or you are a cartel or too close together. So the formation of more terminal alliances is dependent to an extent on the competition in the port or with neighbouring ports, and on the attitude of the authorities towards competition.”
Talking practicalities
The other issue to consider, says Mr Davidson, is how it works in practice. “Yes, you can sign the document to say you will work together with your neighbouring terminal - but to really make it work, you may need to buy or merge, in order to bring in the same rules in terms of strategy, profitability and shareholding, and have a completely uniform approach.
“Shipping lines can have alliances because they will have similar capacity vessels and share schedules and rotations. However one terminal in a port could be very different from another, so it is not aligning like with like. The chances are the one of the two terminals just isn't as good as the other one, so you would always have a weaker terminal of the two which is difficult to overcome.
The proliferation of mega container ships means massive surges of containers when they do call. A terminal alliance might sound like the answer - but Mr Davidson points out: “The alliance idea doesn't address the fact that usually everyone in the port has the same peaks. So even if you work together, you are still suffering the same peaks.”
It is difficult for terminals to form successful working alliances if they are not immediately next door to each other, he points out. “If you share a quay line, you can cooperate more easily. If you are across the bay from each other, it is much harder.”
In the case of the Miami partnership, the two terminals are, as pointed out by the FMC, in close proximity to each other.
“The alternative is what you see in Los Angeles/Long Beach, where the volumes of an alliance get spread over numerous terminals and there are lots of inter-terminal transfers. Clearly it would be better to merge neighbouring terminals so you don't need to split the volumes so much. In Asian ports perhaps there is more port authority ability to make these things happen but in North America and Europe, where private operators are more independent in their outlook, it is more difficult for the authorities.”
Space premium
Despite recent expansions, true deepwater capacity for vessels of 18,000 teu and above is still at a premium in Northern Europe, says Andrew Penfold, director - global maritime at WSP Parsons Brinckerhoff.
“At first you think the (liner) consolidation means the common user terminal operators are scrapping around for business - but not really. The point should be made that the mergers and consolidation situation in the shipping lines certainly wasn't driven by wanting to cut bunker prices or handling prices - it was driven by their own self-inflicted problems of overcapacity. The question of which port choice or which terminal you use has been almost an afterthought and is only now receiving the attention it needs.”
The challenges of handling the volumes of alliance partners are emerging in the developing world too, he says. Again, terminals will struggle to handle the sheer volumes involved; there are already instances where the demands of the big caller are so huge that the terminal operator has to push out the smaller shipping lines. “That provides an opportunity for smaller terminal operators to get in.
“Economies of scale? Yes, on the water, driven by the shipping lines' problems. But with the higher consignment size to push through the terminal, generally speaking you hit the point when the efficiency of the terminal starts to decline. I think there will be some scope for more terminals to work together in response to their customers' consolidation - but they don't need to do that - at the moment the terminal operators aren't in distress from all of this.”
The Port of Long Beach has been addressing congestion caused by ever-long dwell times of containers across terminals. Michael Christensen, senior executive lead, supply chain optimisation, points out that while there is so much opportunity for ocean carrier alliances to use multiple terminals, once one terminal gets congested and a vessel switches to another, the congestion moves among terminals and spreads through a port very quickly.
“Terminals are so interlinked these days,” he says. “When we had a big labour-driven congestion problem two years ago, there was an interesting metric we noted; any time a terminal reached about 80% of capacity, the fluidity of the terminal and efficiency of the operation degraded very quickly.”
ALLURE OF BETTER BARGAINING POWER
Will the creation of alliances give terminals better bargaining power when dealing with their ever stronger and larger customers? WSP Parsons Brinckerhoff's Andrew Penfold says despite expectations, terminal operators have seen only a marginal impact on prices for handling containers, and most are not 'in distress'.
"If you take the volume of containers that CMA CGM would be wishing to handle with their partners and associates, it becomes quite difficult to put that all in one terminal - even Rotterdam World Gateway with its capacity will be sorely tested to handle all the demand. So you have a situation whereby the new alliances will have to make some sort of deal involving one or more other terminals. So while Maersk will be putting all its business through APM in the Maasvlakte, it is quite likely they will have overflow cargo that may have to be placed elsewhere.”
A large shipping line serving Northern Europe will have a certain amount of business that must go into Antwerp and into Rotterdam, says Mr Penfold - it is the 'debatable' business that could be switched into either that is where the real questions are.
“In response to that, the stevedores have continuously added new features and new value-added - for example, barge terminals, investment in intermodal trains. The independent terminal operator is in a better position to make this kind of investment than a shipping line owned terminal would be, because of the money available.”
It might be good for the shipping line to play one terminal off against another in order to secure the lowest possible price, but it isn't good for the shipping lines if they create a situation where none of the terminals can meet their needs, adds Drewry's Neil Davidson.
“If none of the terminals has the capacity or ability to cope with the surges and associated challenges, then having a choice means nothing.”
- See more at: http://www.portstrategy.com/news101/port-operations/planning-and-design/finding-allies#sthash.yJx0u3Jk.dpuf

December 10, 2016

An agreement between the South Florida Container Terminal and Port of Miami Terminal Operating Company could be the first of many at US ports.

WASHINGTON — US regulators are reviewing a proposed agreement between two marine terminal operators at the Port of Miami that would allow the terminals to jointly negotiate terms and conditions with container lines — a first for the United States.

Although the port of Seattle and Tacoma came together operationally as the Northwest Seaport Alliance in 2015, this is the first time two marine terminals have sought the Federal Maritime Commission’s blessing to create their own alliance. Miami’s South Florida Container Terminal and Port of Miami Terminal Operating Company want to jointly negotiate, set, and approve terminal rates, charges, rules, and regulations, and rates of return between the terminals.

South Florida Container Terminal is an APM terminal, in essence, with the added benefit of a common user terminal designation. POMTOC was PortMiami’s only common user terminal until the port made all three terminals common user, including the Sealand Terminal.

But as Maersk withdrew from its APM terminals and sold interests in them, the benefit of Maersk’s exclusive calls at it’s terminals was displaced by a need for greater warf space and increased need for limited SuperpostPanamax cranes. Rather than compete for the limited resources at PortMiami and drive down costs in the competition the two adjacent terminals decided it would be easier to collaborate.

The terminals’ request parallels the vessel-sharing agreements container lines have formed to pool their cargo in larger ships in order to mitigate overcapacity and broaden their networks. Through the alliances, the container lines still compete with fellow members, and are forbidden from jointly marketing, selling, or contracting with third-parties, such as tug operators and stevedores.

According to FMC Commissioner William Doyle, agreements such as that in Miami are a direct response to the Ocean Alliance, a VSA between China Cosco Lines, Evergreen Line, CMA CGM, and Orient Overseas Container Line set to take sail in April.

The Miami terminals did not respond to requests for comment from JOC.com.

“Since the Ocean Alliance is allowed to jointly negotiate as an alliance with marine terminals who agree to do so, some marine terminal operators and port authorities may want to explore options for entering into their own alliances where they could jointly negotiate terms and conditions with the ocean carriers,” Doyle said at a North Atlantic Port Association meeting outside of Washington, DC. last week.

FMC commissioners say they have also been approached by others, including the South Carolina Ports Authority, regarding a potential partnership with another Southeast port operator.

Doyle said the Miami terminals’ discussion agreement is a step beyond that of the Northwest Seaport Alliance, which gained the FMC’s green light in July 2015, because it will also allow those terminals to jointly negotiate terms and conditions for services with the ocean carriers.

Language in the proposed agreement includes conference and rate-setting authority that would allow the terminals to discuss and agree on matters of rates, charges, rules, and regulations through joint or individual marine terminal operator agreements with ocean common carriers. Additionally, the proposal would authorize the terminals to meet individually or as a group with one or more users, including ocean common carriers, to discuss any matters related to rates, charges, rules, and regulations.

The agreement appears to allow the terminals to jointly meet with a group of ocean common carriers, like an alliance grouping, and come to a joint agreement for services, Doyle said.

The draft agreement submitted on Nov. 16 is still under review, but has received some positive feedback from the likes of Doyle and Cordero. As with vessel-sharing agreements and the agreement for the Northwest Seaport Alliance, the FMC is expected to publish the language of the agreement for a public comment period. The FMC will then have 45 days to request additional information before making a decision.

“At the end of the day, you can’t have major ports in the same region independently trying to address issues in the supply chain,” Cordero said. “This agreement allows the FMC to monitor this in such a way that it doesn’t border collusion or anticompetitive behavior.”

Contact Reynolds Hutchins at reynolds.hutchins@ihsmarkit.com and follow him on Twitter: @Hutchins_JOC.

December 04, 2016

Friends and associates:
Early in June things were looking good. I was preparing my book marketing agenda (Inside NASA’s Quest for Life in Space) with hopes of appearing at the Miami Book Fair.
The recurring pain in my legs was improving to such an extent I was ready to start working on the stationary bike. And I quit smoking! Then, at the end of June I had a stroke.
Baptist Hospital was wonderful and my recovery was swift with few residual signs of damage. I had problems with complicated thought and recovering the correct terms for concepts and nouns, still do. The stroke knocked the book marketing plans akimbo because I could no longer speak with confidence on behalf of my book. That situation is improving, however.
The stroke had another unexpected consequence. When I began to recover enough to get out of bed while still in the hospital, my leg pain was excruciating. Fortunately, a wise attending ARNP suggested an MRI and from that MRI, I learned that separate from the stroke, I also have a cyst on my spine and spinal stenosis.
Since June I have been relatively immobile, taking meds four times a day to stabilize my blood pressure, watching TV, sleeping and going for tests leading to spinal surgery. Thank God for American Pickers!
Now that the blood pressure is stabilized and the tests are concluded I have scheduled my surgery for Dec. 28th at Baptist. They will separate my spine, cut out the cyst and offending bone/vertebrae, emplace a spacer then lock it all in place with titanium bolts. It seems a daunting procedure but I am assured it happens all the time with a high rate of success.
The surgery will be followed by three or four days of hospitalization while the pain is controlled then weeks of rehab at a Baptist-related facility.
My doctor made no bones about my situation. I am a 68-year-old car with flat tires and a screwed up drive shaft. He can fix the tires and straighten up the drive shaft but I am never gonna be a new car again.
My wife, Debbie has been an anchor throughout all of this. She smiles through it all and wakes me each morning with the pitter patter of my pills and a look of encouragement that could never be replaced. So I’m blessed, truly blessed.
Still, wish me luck; and for those of you who pray, add me to your list.

December 01, 2016

According to vesselsvalue.com, Hamburg Süd’s fleet of 44 vessels, all operating north-south services in the Latin America market, is valued at $1.44bn.

By Mike Wackett 01/12/2016
Maersk Line today announced it is to acquire Hamburg Süd in a cash deal one analyst claims could be worth up to $5bn.

“We estimate the takeover price in a range from $3bn-$5bn, which would increase Maersk’s leverage from 1.2x to around 1.6x full year 2017 EBITDA,” said Jeffries in a research note.

Maersk’s acquisition of the world’s seventh-biggest carrier would lift its capacity to 3.8m teu, from its current 3.1m teu, giving it an 18.6% global share.

The financial implications are harder to gauge, given the highly secretive nature of Hamburg Süd as part of Germany’s private Oetker Group.

“Profitability of Hamburg Süd hasn’t been disclosed, but we suspect it is depressed in the low container freight rate environment,” Jeffries said.

“As a result, the takeover would only create value if profitability would recover, through a combination of significant cost synergies and a potential recovery of container freight rates,” added the analyst.

The deal, following a recent wave of industry consolidation, will leave only 13 global carriers, compared with 20 at the start of the year.

According to vesselsvalue.com, Hamburg Süd’s fleet of 44 vessels, all operating north-south services in the Latin America market, is valued at $1.44bn.

The carrier recently made a foray into the east-west trades, but Maersk Group chief executive Soren Skou said today that “no decision had been made” on whether these services would continue after the completion of the acquisition of the German carrier at the end of next year.

Mr Skou told The Loadstar this morning that the “strong Hamburg Süd, Alianca and CCNI brands” would be maintained in Latin America, subject to regulatory approval, and that the east-west business “would fall within the 2M [alliance]”.

According to Alphaliner, Hamburg Süd purchases more than 2,000 slots a week from UASC, Cosco and APL as part of its global liner service offering on the Asia-Europe, transpacific and transatlantic trades.

These slot-charter agreements are set to end next April with the formation of the new vessel-sharing alliance structure, and it is difficult to see how Hamburg Süd could maintain its east-west market.

“Hamburg Süd is a very well-run and highly respected company with strong brands, dedicated employees and loyal customers,” said Mr Skou. “It complements Maersk Line, and together we can offer our customers the best of two worlds, first of all in the north-south trades.”

Chairman of Hamburg Süd Group, Dr Ottmar Gast, said the decision to “divest its engagement in shipping”, which can be traced back for 80-years, “was not an easy decision for my family”.

A separate statement from Oetker Group said continuing “active participation” in the shipping sector “would entail an even higher capital requirement”, which would “make the balancing of risk within the Oetker Group business portfolio more cumbersome”.

It added that in its view Maersk was “the ideal partner to preserve and further develop the shipping company’s successful business model”.

Mr Skou confirmed that the Hamburg Süd head office in Hamburg would be maintained, although he did not elaborate on integration of offices around the world, or the carrier’s 6,000-strong workforce, other than to pledge a “light touch”.

Mr Skou also hoped for synergies for Maersk’s terminal operation, APM Terminals, from the takeover.

He refused to be drawn on the acquisition price, other than to confirm that it was an “entirely cash transaction” with “no need to sell assets”.

Subject to obtaining regulatory approval from China, South Korea, Australia, Brazil, the US and the EU etc – a process expected to last until the latter part of next year, Maersk hopes to close the transaction by year-end 2017.

Product tankers, tramp, and other shipping-related operations made up around 7% of Hamburg Süd’s $6.7bn revenue in 2015. Mr Skou said there were “no plans for them as yet”. It is assumed they will be disposed of shortly after the takeover.

October 28, 2016

Cuba in the 40s and 50s was a playground for the rich and famous. The country’s economy was fueled by U.S. investment: some legal, some not so legal. A rich trade in coffee and tobacco found its way to America and the Cuban middle class imported everything from wearing apparel to washing machines. All that ended in 1959 when rebels under Fidel Castro tossed out Batista and threw Cuba into the dark ages.

Castro and Cuba’s Economy

Upon seizing power, the government nationalized factories and plantations; cutting free enterprise and reducing trade with the West. Commerce with the United States ceased to exist. During the next five decades policies of isolationism and heavy reliance on aid from China and Venezuela further reduced Cuba’s trade with the outside world. A once vibrant import and export market shrunk, taking infrastructure with it and placing the nation’s transportation resources far below those of the West.

Cuba’s Emerging Market

Economic reform begun under Fidel’s brother Raul led to increased privatization of business and growth within the middle class. A 2013 Brookings Institute study indicated 30 to 40% of Cuba’s population could be considered middle class when judged against other Latin nations. The report further acknowledged that consumption of foreign goods hampered by trade restrictions with the U.S. would change once embargos were lifted. Cubans aspire to own many of the products other middle class societies take for granted.

The Healing Process Continues

In December of 2014 President Obama and President Raul Castro announced the normalization of relations between Cuba and the United States. This step marking the beginning of trade recovery comes at a time when ocean carriers are placing larger vessels directly in Cuba’s path. What this will mean to Cuba’s economy depends on how much development ports and infrastructure will need to be accomplished to bring the nation up to speed.

Cuba’s Railroad

Under Fidel, Cuba relied heavily on Russian aid to help keep her railway running. After the breakup of the Soviet Union and waning interest from socialist trading partners in Europe, Cuba’s railroad fell into disrepair. In the early 1960s British Rail began funding the purchase of locomotives to upgrade the system. This endeavor was halted by the U.S. embargo. During the early 21st century China and Venezuela invested in the system and modest improvements were made. In preparation for an economic boom that trade with the West might bring, the government is investing $1.3 billion through 2021 to modernize its railroad. In addition to track work and new engines, the national railway will add computers and upgrade its communications with a fiber optic network.

Are Cuban Sea Ports ready for Big Ships?

As trade between Cuba and the Western Hemisphere increases, containers will hit the quays at the nation’s ports. There are three container ports in Cuba: Santiago de Cuba, Havana and Mariel.

Santiago de Cuba, a Traditional Port

The City of Santiago de Cuba was established by conquistadors in 1516. The port grew as the city prospered and modernized to handle cargo as needed. In 2015 Chinese investments totaling $120 million funded expansion of the Guillermón Moncada Port to create a multipurpose facility. Scheduled for completion in 2018, the new terminal will feature 758 linear feet of pier capable of handling smaller Panamax class vessels up to 40,000 dwt.

Port Havana Maintains its Footprint

Looking at the profile for Havana, it becomes evident the government is content to maintain status quo. Port of Havana Container Terminal features 1476 feet of berth with a 32-foot depth alongside. Three gantry cranes and one mobile shore side crane are Panamax class. Operating on 45 acres, the port appeals to local business because of its proximity to the city center and liberal hours of operation. Yard equipment is sufficient to handle what will soon be considered small container ships operating in the Caribbean trade. It becomes obvious that the Port of Mariel located less than 35 miles from Havana will receive funding needed to bring that facility up to speed.

Mariel, a rising star on Cuba’s Map

Nine hundred and sixty three nautical miles north/northwest of Cristobal lies the Port of Mariel Cuba. Interestingly enough it is only 43 miles north of the Dominican load center of Santo Domingo. In terms of serving the Caribbean, Mariel is in range. Built on the site of an old submarine base, Mariel is big ship ready and the government is aggressively promoting expansion to maximize trans-load cargo. Built in 2014 by the Brazilian conglomerate Odebrecht S.A., the port is operated by PSA Ports International. Four Post Panamax cranes cover 2,296 feet of quay giving the port an annual capacity of 800,000 TEUs. Within the next four years an additional 984 feet of berth will be added supported by two Neo-Panamax cranes. The main channel currently deep enough for Panamax ships will be dredged by 2017 to accommodate VLCS class Neo Panamax vessels. Brazil has helped to finance just under $600 million of the ongoing construction, which will add an additional 5,577 feet of quay and facility upgrades boosting the annual capacity to over 3 million TEUs.

Cuba Emerges

Closer to the U.S. Gulf and South Atlantic than other trans-load points in the region, Cuba will be an asset for carriers looking to connect cargo from intermediary ports to the U.S.

This year the Cuban government and the Virginia Port Authority signed a cooperative agreement to increase trade and establish a direct service between Virginia and Cuba. With deep water, a sizable throughput capacity and Super Panamax Cranes, Mariel’s transition from national to international port is assured. Who will be the first to offer direct container service from Mariel to the United States?

October 24, 2016

By Gavin van Marle
24/10/2016
Prospects of the Cuban port of Mariel capturing US transhipment volumes have significantly improved since the US government last week lifted a ban on foreign vessels calling at US ports within 180 days of calling at Cuba.
The US Treasury’s Office of Foreign Assets Control (OFAC) and Commerce Department’s Bureau of Industry and Security (BIS) issued a general licence, waiving the restriction as part of the ongoing programme to restore relations between the two countries.
Treasury Secretary Jacob Lew said: “President Obama’s historic announcement in December 2014 charted a new course for a stronger, more open US-Cuba relationship. The treasury department has worked to break down economic barriers in areas such as travel, trade and commerce, banking, and telecommunications.
“Today’s action builds on this progress by enabling more scientific collaboration, grants and scholarships, people-to-people contact, and private sector growth. These steps have the potential to accelerate constructive change and unlock greater economic opportunity for Cubans and Americans.”
Secretary of Commerce Penny Pritzker added: “These amendments will create more opportunities for Cuban citizens to access American goods and services, further strengthening the ties between our two countries.
More commercial activity between the US and Cuba benefits our people and our economies.”
The lifting of these restrictions is also key to the development of the deepwater container terminal at Mariel, close to the Cuban capital of Havana, which has set itself the target of winning US transhipment cargo from the new neo-panamax vessel sizes now using the enlarged Panama canal.
At the recent TOC Americas Container Supply China event, Charles Baker, general director of TC Mariel, the PSA International-managed container terminal at the port, said lifting the embargo would “allow shippers and their 3PLs to reconsider the overall cost of their deepsea supply chains”.
While some ports on the US east and Gulf coasts have invested heavily in dredging access channels to accommodate the larger ship sizes, others that have yet to complete these programmes, and Mr Baker claimed the Cuban port was ideally located to serve as a first port of call on Asia-US east coast services and act a as a feeder point for ports such as Mobile and New Orleans.
“The normalisation of trade between Cuba and the US is something that is good for the entire region because more investment will come into the region from US companies,” he added.

October 19, 2016

Before its expansion, the Panama Canal was sending 4,500 TEU ships into the Caribbean with containers for trans-loading and final destination. Larger 8,500 TEU vessels transiting the Suez brought a little more volume to island hubs.

Terminals in Jamaica and the Dominican Republic became trans-load centers for the Caribbean and US port range, while facilities in Colon could swing cargo to a wide range of destinations including South America.

Trans-shipment in the Caribbean Sea

Jamaica

The port of Kingston, Jamaica is getting a facelift with the infusion of $600 million for upgrades and expansion to Kingston Container Terminal (KCT). Terminal Link, a subsidiary of CMA CGM and the Jamaican Government, entered into a partnership called Kingston Freeport Terminal Ltd. (KFTL). KFTL will operate the port jointly for 30 years before turning the facility back to Jamaica. Terminal Link will invest $460 million on reinforcing 394 feet of the wharf to meet Euro Code standards and dredging alongside 2,625 feet of the quay to 51 feet. The remaining funds will be spent on terminal expansion and upgrades. In addition the government will seek private partnerships to spend $130 million to dredge Kingston’s harbor to accommodate Neo-Panamax vessels arriving from the canal. The government believes partnering with Terminal Link will bring a major dynamic to the table through CMA CGM’s world-class service with strong ties to Caribbean and Latin Markets.

The Dominican Republic

Prior to the canal’s expansion, the Port of Rio Haina in the Dominican Republic was capable of handling trans-load traffic for the region. With just under 1,731 linear feet of usable wharf face, the Puerto Hiana Oriental facility could accommodate one Panamax vessel working it with two shore-mounted cranes. Thirty minutes east of Santo Domingo lay the suburbs of Boca Chica and Andres. On the adjoining coast sits the Port of Caucedo. Operated by DP World this facility is fully capable of handling the largest ships the Panama Canal can throw at it. Opened in 2002 the port had from its inception counted on the growth in traffic an expanded canal would bring to the Dominican Republic. A 3,280-foot quay comprising three berths with 49.2 feet of water alongside each is sheltered from the open sea by 2,952 feet of breakwater. DP World holds a 50-year concession on the facility and intends to expand its capacity from 700,000 TEUs to over one million containers. The consortium of NYK, Evergreen and Hyundai operating joint services in the Caribbean have spent $15 million to create a Caucedo Logistics Center to improve their competitiveness in the region. The Center will coordinate the discharge and trans-loading of containers destined to various ports served by the three partners.

The Colon Connection

While port expansion in Balboa has taken center stage in recent years, the three terminals comprising the Atlantic port of Colon should not be overlooked.

Hutchinson Port Holdings (HPH) Cristobal: HPH operates two terminals in Panama, one on each coast.

Placing emphasis on the cruise industry, Hutchinson added a state of the art berth number 6 to Cristobal Port, which can handle two of the largest ships, which enter or exit the canal. The container terminal has 11 berths with a total of 14,468 feet of wharf. Thirteen Panamax and Post Panamax cranes handle vessels drawing up to 42 feet of water. The facility’s annual capacity is 2 million TEUs.

Manzanillo International Terminal (MIT): Built on the old Coco Solo Sur Naval Base, MIT is operated jointly by Carrix Inc. (SSA Marine) and the Motta and Heilbron families. A multimodal facility, the container terminal is equipped with 19 Post and Neo Panamax cranes on 5,380 linear feet of quay. The current depth alongside is 42 feet but can be dredged to 49 feet in the future. MIT has an onsite logistics park adjacent to the FTZ (Free Trade Zone) and easy access to the Panama Canal Railway. The terminal handles around 3.5 million TEUs per year.

Colon Container Terminal (CCT)

Operated by Evergreen Marine, CCT can handle 2.4 million containers per annum. The depth at the newly completed Berth 4 is 54 feet. Three Neo Panamax cranes discharge vessels loaded with 23 containers across their beam. Plans to deepen Berth 3 and extend both 3 and 4 will bring the total useable wharf up to 2,559 feet allowing the facility to handle two 13,000 TEU ships at the same time. CCT has easy access to the FTZ and near dock connection to the railway.

The Next Generation of Hub and Spoke Shipping

As the Caribbean gears up for Very Large Container Ships (VLCS), ports will have to become more competitive. The winners will be those terminals, which can turn boxes quickly and efficiently. It will require a combination of deep draft, available cranes and skilled labor. Wider beam VLCSs will need cranes with greater out-reach. Crane operators will also have to be conscious of lift and discharge time. Today’s facilities are only achieving 28 to 32 lifts per hour. To turn transition cargo quickly the terminal will need to either increase lifts per hour or add additional cranes to each vessel worked. The container boom is just beginning in the Caribbean Basin. Will that momentum reach the trans-load ports of Latin America?